The Australia–Japan partnership is our closest and most mature in Asia, and is fundamentally important to both countries' strategic and economic interests. The relationship is underpinned by a shared commitment to democracy, human rights and the rule of law, as well as common approaches to international security. These core values are further strengthened through trade and investment ties. In 2017, Japan was Australia's second-largest trading partner, second-largest export market, and second-largest source of foreign direct investment.
There have been three major phases in the development of the post-war Australia-Japan relationship:
Today, the warmth and broad scope of the bilateral relationship is articulated in our shared Partnership Agenda.
Australia and Japan have a strong and broad-ranging security relationship. Our two countries work very closely in strategic alliance with the United States, and lead in critical regional partnerships with countries such as India and the Republic of Korea (ROK). Australia and Japan regularly participate in joint defence exercises and frequently consult on regional security issues, such as the nuclear tests and ballistic missile launches undertaken by the Democratic People's Republic of Korea (DPRK).
The 2007 Joint Declaration on Security Cooperation (JDSC) provides a foundation for wide-ranging cooperation on security issues between Australia and Japan, including in law enforcement; border security; counter-terrorism; disarmament and counter-proliferation of weapons of mass destruction; maritime and aviation security; peace operations and humanitarian relief operations. We have worked closely together in key defence operations, including in Iraq, East Timor, and Pakistan.
The JDSC also established regular '2+2' talks between foreign and defence ministers. At the 8th 2+2 talks in Sydney in 2018, Ministers welcomed the closer engagement between Japan and Australia and reaffirmed their commitment to further deepening the Special Strategic Partnership between the two countries. They reiterated their determination to work proactively together and with the United States and other partners to maintain and promote a free, open, stable and prosperous Indo-Pacific founded on the rules-based international order. Previous outcomes of the 2+2 process include an Acquisition and Cross Servicing Agreement (ACSA) on defence logistics cooperation, which entered into force on 31 January 2013, and an Information Security Agreement on the sharing of classified information, which entered into force in March 2013. A revised ACSA was signed in January 2017 and came into force in September 2017.
In 2014 the leaders of both countries elevated the Australia-Japan relationship to a 'Special Strategic Partnership'. In January 2018 then Prime Minister Turnbull visited Japan, and in November 2018 Prime Minister Abe visited Australia, deepening our bilateral ties.. Our Prime Ministers' annual meetings are complemented by a host of regular Ministerial visits.
Australia and Japan have jointly led efforts in support of the Nuclear Non-Proliferation Treaty, including as co-founders of the cross-regional Non-Proliferation and Disarmament Initiative (NPDI) established in 2010. Australia and Japan are also co-Chairs of the Friends of the Comprehensive Nuclear Test-Ban Treaty (CTBT) group.
Australia and Japan are close partners in regional forums such as Asia Pacific Economic Cooperation (APEC) and the East Asia Summit (EAS). Australia supports Japan's aspiration to become a permanent member of the United Nations Security Council. Our 2011 Memorandum of Understanding on international development cooperation facilitates information exchange and cooperation in sectors such as education, health, food security and infrastructure. In 2016 we agreed to a 'Strategy for Cooperation in the Pacific' which outlined four areas for cooperation: effective governance; economic growth and sustainable development; security and defence cooperation; and diplomatic initiatives. As a close friend, Australia provided extensive assistance to Japan following the 2011 Great East Japan earthquake and tsunami, including specialised personnel, defence aircraft, and a donation of $10 million. Australia continues to support reconstruction of areas devastated by the disaster, including through programs funded by the Australia-Japan Foundation.
Australia and Japan have agreed not to let our differences over whaling affect our close relationship. Our wide-ranging common maritime interests include cooperation in Antarctica and safety-at-sea issues.
The Australia-Japan economic relationship is underpinned by complementary strengths and needs. Australia is a safe, secure and reliable supplier of food, energy and mineral resources and a world-class centre for financial and other services. Japan became Australia's largest trading partner in the early 1970s — a position it maintained for 26 years. Japanese investment continues to play a significant role in the development of the Australian economy.
Australia and Japan held the inaugural Ministerial Economic Dialogue in July 2018. The Dialogue offers a regular mechanism for high-level engagement on strategic economic and trade cooperation to complement high-level defence and security cooperation and annual leaders' meetings. The Dialogue supports the strong and growing trade and investment relationship between Australia and Japan.
Japan was Australia's second-largest trading partner in 2017, with two-way goods and services trade valued at $71.8 billion. Japan is Australia's second-largest export market.
Goods exports to Japan were $45 billion in 2017, which was around 14.9 per cent of our total goods exports. In 2017, Australia's major merchandise exports to Japan included LNG, coal ($16.5 billion), iron ore ($5.6 billion), beef ($2 billion), and copper ores and concentrates ($1.3 billion). Japan was Australia's largest merchandise export market for coal, LNG, beef, aluminium, cheese and curd, liquefied propane and butane, and animal feed.
On the other side of the trade ledger, in 2017 Japan was Australia's fourth-largest source of goods imports, including passenger vehicles ($7.6 billion), refined petroleum ($2.8 billion), gold ($2.3 billion), and goods vehicles ($1.6 billion).
Total bilateral trade in services in 2017 was valued at $5.8 billion, mostly in the recreational travel, transport and education sectors. Services exports were worth $2.3 billion and services imports were valued at $3.5 billion.
The Japan-Australia Economic Partnership Agreement (JAEPA), which entered into force on 15 January 2015, gives Australian exporters significantly improved market access in goods and services and substantially improves investment protections. Both Australia and Japan are key members negotiating high quality regional trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP).
Japan is Australia's largest source of investment from Asia and fourth-largest overall, with an investment stock of $219.2 billion at the end of 2017. Japan was the second largest direct foreign investor in Australia ($92.5 billion) in 2017, accounting for 10.9 per cent of total foreign direct investment. Japan was Australia's third-largest destination for foreign investment, with an investment stock of $125.1 billion in 2017.
Japanese investment has been essential in the development of many of the export industries that have driven Australia's growth, including in large-scale projects to meet Japanese demand for resources such as coal and iron ore. Japanese investment has also enabled the rapid expansion of Australia's LNG production, notably by way of the Japanese-led $34 billion Ichthys project located about 220 kilometres off the Western Australian coast.
Japanese investment has also begun to extend beyond the traditional areas of natural resources to sectors such as financial services, infrastructure, information and communications technology, property, food and agribusiness. JAEPA will further boost Japan's diverse and growing investment in Australia, generating employment growth including in regional Australia.
Doing business in Japan
Austrade assists Australian companies to build and implement their export strategies. Austrade’s Japan market profile offers practical advice, market intelligence, financial assistance and ongoing support to Australian companies seeking to grow their business in Japan. Austrade also works to promote the Australian education sector within Japan and to attract productive foreign direct investment into Australia. Austrade has offices in Tokyo, Osaka, Fukuoka and Sapporo.
People to people links
Early Japanese settlers started the pearling industry in Australia. Larger-scale migration began after the Second World War, and Japanese continue to settle in Australia today. According to the 2016 census, more than 65,000 residents identified with Japanese ancestry. There were 12,616 enrolments by students from Japan in Australia in 2017, ranking Japan as 13th overall by volume of enrolments for student visa holders. Japanese students enrolled in English courses, VET colleges, and higher education.
As of 2015, there are 108 sister city relationships between Australia and Japan. These sister city relationships provide opportunities for educational, cultural, sporting, and economic exchanges.
Since 2014, Japan has participated in the New Colombo Plan, a signature initiative of the Australian Government that aims to lift knowledge of the Indo-Pacific in Australia and strengthen people-to-people and institutional relationships through study and internships undertaken by Australian undergraduate students in the region. By the end of 2018, the New Colombo Plan will have supported around 30,000 students to study, live and undertake work-based activities in the Indo-Pacific. In Japan, the New Colombo Plan has supported more than 3,100 students to study and undertake work-based learning activities through scholarships and mobility projects.
The Australian Government supports the expansion of people-to-people and institutional links through the Australia-Japan Foundation which provides grant funding for projects aligned with Australia's foreign policy priorities. People-to-people links are also supported by several Japan-Australia societies that provide grassroots community support to the relationship, as well as 100 sister city and six sister state-prefecture relationships. Most Japanese come to Australia on short-term visits as tourists or on business. Japan is Australia's sixth-largest inbound market in terms of short term arrivals, with 437,000 short-term visitors from Japan between March 2017 and March 2018. This is an increase of 2.3 per cent on the previous year.
Japan is one of Australia's most popular short term destinations. Between March 2017 and March 2018, 418,100 Australian residents returned from Japan, which is an increase of 14.6 per cent on the previous year.